What Does a Hybrid Work Model Mean for Best Buy?

Last quarter, Best Buy reported sales +36% YoY driven by stimulus-induced spending, demand for electronics, and continued investment in the home.

Looking ahead, many investors are wondering how long Best Buy can harness momentum from shifting consumer priorities that previously boosted sales.

One shift that continues to show traction is the adoption of a hybrid work model. Now, many employees have 2 work stations to maintain, and remote connectivity is a must have.

• Working from home mentions are more than 300% higher vs. 2019.
• But consumer mentions of heading back into the physical office are rising: +10% YoY, +38% QoQ.

Beyond supporting an increasingly tech-heavy workforce, Best Buy is testing ways to create a more experiential store while simultaneously leveraging digital fulfillment capabilities.

• Pilot stores are amplifying consumer engagement with PC gaming, headphone, fitness, and home theater experiences, and adding more geek squad members.
• Reoriented warehouses serve new covered drive-up/curbside pickup experiences.
• Additional fulfillment updates include reducing merchandise SKU counts to focus on most popular items, reducing overall associates, and utilizing a more efficient queue system so consumers who need help can ask.

LikeFolio data shows continued adoption of Best Buy's omnichannel options like the curbside pickup described above. Note the uptick in 2020 as lockdown began and Best Buy was forced to utilize digital capabilities. The next (and larger) spike shows continued adoption during the Holiday season. This is stickiness.

Now, mentions remain higher vs. pre-Covid during a non-seasonal time: +39% vs. 2019.

All of the fulfillment upgrades have impacted BBY Consumer Happiness in a positive way: +4 points YoY.

But short-term, some normalization in consumer behavior is undeniable.

BBY Mentions have decreased -12% QoQ.

We'll be watching to see if BBY can meet heightened expectations when the company reports 22Q2 results August 24 before the bell.